Felix Salmon

You won’t find many defenders of Dennis Kneale’s philosophy of journalism on Twitter or even among his colleagues in the CNBC studio.

I spent a large chunk of this afternoon debating Kneale on Twitter, and for a while afterwards I thought that time was wasted, since no one had evinced any sympathy for his position at all. But on thinking about it I’ve decided that actually Kneale is being reasonably brave and transparent here, and coming out and saying in public things which many journalists are loathe even to admit in private.

The proximate cause of the discussion was the publication by Peter Lauria of a voicemail that Sumner Redstone, the owner of Viacom, left for him. Redstone wanted to know who had leaked a story to Lauria about Redstone and “a sexy but talentless all-girl band;” he told Lauria, on the voicemail, that “you will be well-rewarded and well-protected” for giving up the source.

There are basically four options that a journalist has on getting a voicemail like that:

1. Flattered by the personal attention from a billionaire mogul, you can phone him back, give him exactly what he wants, and get some kind of quid pro quo down the line.
2. Embarrassed for an aging billionaire, you can let the message slide, and give the mogul a pass.
3. Realizing you have a minor scoop on your hands, you can publish the voicemail.
4. Realizing you have a potential major scoop on your hands, you can play along, phone Redstone back, and ask him how much he’s willing to pay for the name of the source, taping your conversation all the while.

Lauria is, in Kneale’s words, a “beast” (which is also the name of the site he works for), but Lauria didn’t go all the way: he stopped short of #4 and went with #3 instead.

But that was still far too much for Kneale, who assumes that Redstone considered the message to be off the record, and on those grounds reckons that Lauria is at fault for publishing it. “He may never again be able to have lunch at Michael’s, the midtown Manhattan media mecca,” he writes, rather bathetically.

Of course Lauria violated no confidences here, and really just did his job: if you leave a voicemail for a journalist with no indication that it’s in confidence, and that voicemail is newsworthy, then the journalist is pretty much obliged to publish it.

But Kneale looks at things a different way, and even admits to covering up for Redstone himself, in the past, when Redstone violated SEC rules in an interview at Forbes. “We knew he was off-the-reservation when he did it, so we gave him a pass, didn’t use it,” he tweeted, before backtracking a little on his original statement.

Kneale reveals himself to be a consummate player of the game, saying that it’s “unwise” to “burn sources” (by which he means the likes of Redstone, not the likes of Lauria’s original source). “Sumner will NEVER again give Lauria a free scoop now,” tweets Kneale, who has internalized the idea that if you’re nice to moguls, then moguls will be nice to you. It’s an integral part of the CNBC formula, which regularly gets CEOs onto TV so that it can flatter them by throwing them softball questions and making it seem as though the markets really care what they say. He writes that companies “all the time ‘reward’ us–help me out on this one, i’ll give you a scoop on that one. commonplace.” And he’s fine with that.

But in the era of the Daily Beast and Gawker and even FT Alphaville, not everybody plays that game any more, and the public is much better served for it. Kneale might be happy to reveal that he has frequently been asked by CEOs to burn his own sources, but he’s not going to tell us who they are: he feels it’s his job to keep such juicy information from the public, rather than reveal it to them. And the fact is that he’s in pretty illustrious company.

Once you start working your way up the masthead, and hanging out with moguls at places like Davos and Aspen, this tends to happen to you: you get more comfortable, and less hungry; you think that access is more important than actual stories. Clearly Kneale has reached that place, and in a way I’m impressed that he’s happy to admit it. Most of the swanning-around class of journalists are delusional enough that they’d never do that.

So let’s give three cheers for Peter Lauria, and his colleagues in the blogosphere, who are happy to break unspoken rules which don’t benefit the public if they know there’s a story worth telling. There will always be lots of journalists who are expert at playing the game, and schmoozing important sources. That’s all well and good. But we need feistier hacks as well. And where Kneale goes wrong, with his greybeard act, is by pretending that we don’t, and that the world would be a better place if everybody played the game. It wouldn’t. We need the likes of Lauria; in fact, we need them much more than we need a dozen Dennis Kneales.

Kneale wants to ask what counts as necessary and what counts as gratuitous. Necessary is journalists serving their readers with scoops; gratuitous is 99% of what appears on CNBC, and 100% of what appears when Kneale is on screen. (I’m on the gratuitous side of the line as well.) Good journalists can be found on both sides of the line, but it’s the hungry newsbreakers who are important. The rest of us might be interesting, or entertaining, but we should never be the real soul of any news organization.

The people at CNBC never got back to me when I asked to talk to them about their counterfeiting documentary, and now that I’ve seen the trailer, I can see why: it gobbles uncritically all of the baseless statistics that I’ve been railing against since 2004.

The trailer talks ominously of a “secret criminal world robbing businesses of $250 billion a year,” before cutting to a customs agent talking about how the volume of seized counterfeit goods has risen from $47 million in 2000 to $261 million in 2009. Is she really saying that Customs and Border Protection literally lets through 99.9% of all counterfeit goods, despite inspecting 8% of shipments coming into the country?

The show never does those sums; instead, it goes to a big warehouse with “just over $200 million of seized cargo,” adding that “there are 12 more like it around the country.” Hm, that would make $2.4 billion of seized counterfeit goods, if true — but when were they seized, given that ten years ago, customs was only seizing $47 million a year in such material?

And that’s not the only quantitative dissonance. “This year alone, counterfeited medicines will be a $75 billion industry,” says a representative of Big Pharma; there’s no indication that that number comes form a mysterious report which no one can ever seem to produce, which was published in 2005, and which projected the number basically out of thin air. Meanwhile, CNBC’s own slideshow puts the volume of seized counterfeit drugs at just $11 million last year.

It’s worth remembering, too, that often the values of seized goods are generally based not on how much they would sell for on Canal Street, but rather how much the real items would sell for. How can Customs claim to have seized $21.5 million in handbags? When you try to track down the figures, which is often hard, you tend to come up with implausibly high numbers for the value of one counterfeit handbag or CD.

The CNBC report insists on parroting the old “7% of world trade” number which was never based on anything at all; that allows it to inflate the numbers in the documentary as much as possible. It doesn’t even use the dreadful OECD report, which massively overestimated trade in counterfeit goods and even then could only manage to reach a “global ceiling” of $200 billion by pulling a grossly inflated number out of thin air, doubling it, and then doubling it again. CNBC, by contrast, says that trade in the US alone is more than that.

Oh, and they also say that counterfeiting costs “nearly 750,000 legitimate jobs each year.” I love that “nearly”: it makes it seem as though the number wasn’t completely invented.

The fact is that the cost of counterfeiting is almost certainly orders of magnitude lower than the insane numbers being bandied around by people who genuinely consider themselves numerate financial journalists at CNBC — indeed, it might even be negative. And every scaremongering journalist who uncritically parrots those numbers is part of the problem, not part of the solution. Carl Quintanilla, and your producers — shame on you all.

The history of the news business has no shortage of legendary larger-than-life straight-talkers with vision and drive and a bottle of whiskey in their desk drawer. The top editorial staff at newspapers, magazines, and television news shows might be well versed in the dark arts of office politics, but they nearly always make sure that their public face is a simple and often friendly one. They can be trusted, is the message.

So why is the online world so different? I don’t want to pick on any individual in particular, but this interview today with the executive editor of a major website, conducted via email so that he could clearly articulate exactly what he wanted to say, is full of the kind of business and management jargon that most editorial-side employees instinctively recoil at.

Focusing on key verticals… productization… thought-leaders… packaging the right applications and tools to support coverage… coverage verticals… legacy media… high-impact editorial packaging… as I described in our mission… work hip-to-hip every hour… driving a quickly evolving digital identity and user experience… a giant white space… adopting a “content-ownership strategy”… hire incremental editors… a shot at being great… That was achieved by hewing to our mission and adopting the content ownership strategy.

In principle, I think it makes sense for the old lines between the editorial and the business sides to blur, especially online. The success of both requires staying on top of the same technologies, and when the integration is done well, everyone benefits, especially the readers. The alternative is all to often that readers get annoyed by floating survey ads or other bright ideas dreamed up by some sadistic media buyer, which ultimately ruin the editorial product much more than any honest sponsorship would.

The top editor of most publications has always been wheeled out to impress advertisers on a regular basis, but online editors can often be much more constructive and helpful, without violating any ethical boundaries, than their print counterparts. They tend to have an instinctive idea of what works and what doesn’t, on their site — and that kind of hard-won intelligence is exactly what advertisers want to know.

It’s important, then, for top online editors to be able to speak the business side’s language. If nothing else, it helps them to get the resources they need to create a great product. But equally when they’re not dealing with business-side issues, I think there’s a lot of value in them showing that they haven’t had their brains eaten by zombies.

When economics meets politics, as we all know, politics wins. And when the business side meets the editorial side, the business side wins. And that’s the downside of merging the two: in a medium which in journalists are already increasingly pressured to maximize their daily pageview numbers, it falls to their bosses to fight for the kind of things which might not be as immediately quantifiable, but which are much better at building a long-term franchise.

When journalists instead see their bosses spewing missions and strategies and coverage-supporting application packages, they tend to get a little demoralized. Those things are all well and good, but I tend to get worried when I see them emanating from anybody with the word “editor” in his job title. It means that a crucial part of editorial leadership — clearly articulating the vision of the site or publication, rather than just asserting that you have one — is prone to getting lost.

I’m very confused by WaPo’s new “Washington Post with Bloomberg” business section. Bloomberg gets a lot of branding at the top of the page, but at least at launch it had no stories at all above the fold.

If you zoom out or scroll down you can finally see some Bloomberg stories appear, I’ve marked them with arrows here. And if you look really carefully, you’ll see that they say “(Bloomberg)” after the headline, in hard-to-read light grey type.

There doesn’t seem to be any top-level editing of these stories: the third Bloomberg story, “Sales at U.S. Retailers Decreased for a Second Month in June”, is basically exactly the same as the top WaPo story, “Retail sales drop 0.5 percent in June.” Bloomberg, here, is adding nothing to the WaPo file.

But the real weirdness happens when you actually click on those links. The WaPo story looks and feels and is part of the WaPo website. It’s hosted at washingtonpost.com, and has the familiar three-column view with lots of easy navigation.

The Bloomberg story, by contrast, takes the new biz-section header, pastes it on top of the Bloomberg wire copy, drops a WaPo footer at the bottom, and hosts the whole thing at bloomberg.com. It’s neither one thing nor the other: after spending a lot of time and money on a very good new redesign of its main site, Bloomberg seems to have slapped together a new co-branded site for the Washington Post in about five minutes. If you try to navigate to the top-level URL, http://washpost.bloomberg.com/, you just get a useless error message.

In the accompanying press release, Bloomberg’s Matt Winkler proves himself a master of PR gibberish:

“As Bloomberg has become the first, fastest and most factual provider of the story of money in all its forms, readers of the redesigned online business section conceived with the Washington Post can look forward to a unique blend of actionable news,” said Matthew Winkler, founder and Editor-in-Chief of Bloomberg News.”

Insofar as this means anything, I think Winkler is saying that the WaPo’s readers can and should trade based on what they read there. That’s the only reason to care so much about the news being “first” and “actionable.” But that would be a really bad idea, for a large number of reasons which should be obvious to anybody thinking about it for more than five seconds.

At heart, this looks to me as though it’s the online-news equivalent of one of those Europudding movies, co-produced by nine different state-backed film production agencies. I’m sure it seemed like a good idea at some BizDev meeting, but from a purely editorial perspective it makes little if any sense. Why go to the trouble of building a whole new site co-branded with Bloomberg, when the WaPo was always welcome to simply link to Bloomberg stories from its business-section homepage any time it liked? This deal just makes it that much harder for WaPo to link to anybody else.

I suspect that what’s really happening here is that Bloomberg is desperately trying to turn itself into a consumer-facing brand in as many ways as it possibly can — through television, BusinessWeek, co-branding at the Washington Post, and anything else it can come up with. It has the budget to put together something like this, and so it has done so. But it’s being weirdly slapdash and inconsistent about it, from the perspective of the actual consumer. And the decision to force readers of the Washington Post to navigate to a whole new bit of bloomberg.com when they want to read Bloomberg’s stories — that just makes no sense at all. Either you integrate your material into the WaPo website, or you don’t. This attempt to find some kind of middle ground simply fails.

If you’re going to put a paywall on your website, this is a very sensible way to do it:

Press+ is aware that there are ways users can avoid paying for the content its affiliates are about to charge for, including by using this Firefox extension (as well as by using multiple browsers), if they are willing to spend the time and effort and endure the related inconvenience.

As we develop the system in the coming months we will implement our plans to address this problem to the degree it is material for any publisher. But we’ll do so from the prospective that we are talking about content that has been free for years; thus the fact that a small percentage of people may try to circumvent a modest charge for it and succeed in doing so for a short period of time must be seen in light of the fact that most won’t, which means that a new revenue stream from loyal readers will have been created.

David Brauer seems to be of the opinion that any new paywall should be “robust” and shouldn’t be able to be defeated by means of a plugin (or by using multiple browsers, or by deleting cookies, or various other methods, I suppose). But that’s exactly wrong. The purpose of a paywall isn’t to keep people out, it’s to generate revenue from loyal readers. And the expense of making the paywall harder to circumvent is almost certainly greater than the marginal extra revenue that such an action would generate: after all, the kind of people trying to get around the paywall will most likely simply go elsewhere, rather than pay.

Back in the old days of print newspapers, you could read them for free by going to your local library or your nearest hotel lobby. You want a free copy of the FT? Just pop in to the FT building at 1330 Sixth Avenue — there’s always a pile there. A paywall is like the cover price on a newspaper: it’s the amount that you’re asking and expecting your readers to pay, but it’s not a sum without which reading the paper is impossible.

LancasterOnline is asking its readers to pay it $1.99 a month if they read a lot of obituaries. That’s a reasonable request and if I was a regular reader of that site’s obituaries, I would pay the fee. To sneak around the paywall is to place oneself in an antagonistic relationship with the paper you’re reading: it might be legal, but it’s certainly impolite. It’s a bit like stealing fruit from a roadside farmstand operating on the honor system. And I can’t imagine that’s the kind of thing that LancasterOnline’s loyal obituary readers would do.

Meanwhile, high paywalls impose other costs. When I’m reading Twitter on my phone and follow a link to the WSJ or FT, I hate running into their paywall. And the FT, in particular, has a paywall which breaks in unexpected and annoying ways, barring you from reading stories even when you’re a logged in subscriber. Recently a very generous multimillionaire, a huge admirer of the FT and a loyal subscriber of many years, told me that he hates the FT paywall — partly because he runs into it sometimes and partly because it makes it harder for him to share FT stories he likes. It’s pretty obviously not good business for the FT to alienate its customers like that and I suspect that part of the reason that the NYT is taking so long building its paywall is to try to avoid those problems as much as possible.

Circumventability, then, is a sign of a sensible paywall, not a sign of a badly-designed one. People will get around any paywall if they really want — just pasting the headline into Google News will often work fine. Newspapers shouldn’t worry about the people who do that; instead, they should be flattered. And spend their efforts instead on improving their relationships with their paying customers.

At the very end of his profile of Henry Blodget, Andrew Goldman drops in a jaw-dropping quote from Gawker founder Nick Denton:

Denton lays out the most optimistic scenario: “This is like the early days of cable,” he says. “High—surprisingly high—startup costs. But eventually advertisers move across and the margins are lavish for the leading players in each category. Jezebel becomes Lifetime, HuffPo becomes MSNBC and Henry becomes CNBC.”

This is by far the most bullish thing I’ve ever heard come from Denton and it makes me wonder whether, finally, he’s beginning to seriously consider — for the first time — selling a large chunk of Gawker Media.

Denton hasn’t launched a new website in a while; in fact, he’s been consolidating his properties, folding the likes of Valleywag and Defamer into Gawker and selling off blogs like Wonkette and Consumerist which he felt he couldn’t make work. Instead, he’s been quietly seeing his empire grow truly enormous: according to Quantcast, he reaches 30 million unique visitors globally every month and 17.3 million in the U.S. That’s 450 million pageviews per month — pretty impressive, although the rate of growth is clearly slowing.

Maybe now is the point at which Denton needs to find an outside investor to shoulder the “surprisingly high” costs of taking a strong online franchise and turning it into the multi-billion-dollar media property of the future. Denton is a serial entrepreneur, having become wealthy by founding and selling First Tuesday and Moreover. He doesn’t need the money from selling Gawker, but at the same time I can’t imagine him just sitting there running it as a going concern, cashing his dividend checks and patting himself on the back for creating a successful company. He needs a challenge, and competing head-on for advertisers with the giants of cable TV is certainly that.

As for Nick being nice about Blodget, that’s classic Denton. Gawker doesn’t do slideshows and listicles and in fact does very little of the aggregation that’s the bread and butter of Blodget’s business. And Denton knows full well that in an apples-to-apples comparison, Blodget is going to make Gawker look almost old-fashioned in its rectitude. If Denton can help give Blodget a certain amount of credibility, that just makes Gawker Media look positively Olympian. Which is maybe exactly what he wants, if he’s finally willing to accept outside investment — at a suitably stratospheric valuation, of course.

Josh Tyrangiel became arguably the most sought-after editor of his generation by boosting Time.com’s pageviews from 400 million to 1.8 billion within three years, and by successfully transforming a bunch of grizzled old magazine journalists into web-speed multimedia content producers:

“Getting Time magazine to be a daily operation? It required me to be my most charming, scheming and belligerent.”

Now that Tyrangiel has left to BusinessWeek, however, Time seems determined to roll back all of his achievements:

We’ve said for awhile that increasingly we’ll move content from the print (and now iPad) versions of our titles off of the web… Our strategy is to use the web for breaking news and ‘commodity’ type of news; (news events of any type, stock prices, sports scores) and keep (most of) the features and longer analysis for the print publication and iPad versions.

If the 1990s saw news organizations set up massive parallel online operations, then, and the 2000s saw the integration of the online operations with the legacy operations, then is this the beginning of the 2010s backswing, where the two become bifurcated again?

My guess is that the answer is no, and that this is just a case of Time making a tactical decision which makes no strategic sense. It wants to sell lots of copies of its iPad edition at $5 a pop, but it’s only putting the magazine content into the app, if all of that can be read on the iPad for free just by firing up the web browser, it fears that sensible consumers won’t bother. So rather than improve the iPad app and make it worth the money, Time is artificially crippling its website.

So long as the iPad app remains broken, however, this idea is doomed to fail. People read the magazine in one of two ways: either they subscribe, at a significant discount to the cover price, or else they buy the magazine at a newsstand, where they have the opportunity to browse through it first. Neither is possible on the iPad, which sells issues only one at a time, and which gives no tasters of what’s inside, just headlines. (The app does have some good free content, if you find the hidden button in the bottom right hand corner, but it’s exactly the same free content that’s available on the website.)

My guess is that none of this would have happened had Tyrangiel stayed at Time, but that once he left, the heart of the website that he helped to build was doomed. It won’t be long, I’m sure, before Time’s journalists settle happily back into their weekly routine, and the website is left to a very different team of people, producing very different content. Which is clearly not a sustainable model.

Remember David Harvey, the chap with the book-length critique of the financial crisis through an explicitly Marxist lens? I’d be surprised if the number of readers of this blog who read his book ever broke into the double digits, but hey, what if I told you that there’s a fabulous little YouTube video from RSA Animate which illustrates a lecture that he gave with inventiveness and verve? That’s more like it:

This is one of the most gripping ways I’ve yet seen of presenting complex and dry ideas: it’s Paddy Hirsch with better drawing skills, higher production values, and two months rather than two hours to put it all together. There’s more where that came from: try Barbara Ehrenreich, Dan Pink, or Jeremy Rifkin. I’m trying to think who I’d most like to see given this treatment: Matt Ridley would be very interesting, I think, or Paul Collier, or — getting very geeky and financey — how about Riccardo Rebonato? Even Nouriel Roubini might be a lot of fun. More, please, RSA!

(HT: NC)

There’s been an awful lot of weird and unusual PR surrounding The Zeroes, by Randall Lane. My copy has a big white sticker on it: EMBARGOED, it says, until Tuesday June 29 — as though there is hot breaking news buried somewhere in the book. (It’s definitely not in the Vanity Fair excerpt, which came and went with barely a ripple of notice.)

Lane himself maybe hit on a slightly newsier story with an excerpt at the Daily Beast, where he’s “editor-in-large”, whatever that’s supposed to mean. In an article timed to coincide with the book’s publication, Lane talks about Lenny Dykstra, who may have made some slightly sleazy deal with a small company in California:

In the late winter of 2008, an entrepreneur named Richard O’Connor, who had become Dykstra’s favored adviser, introduced him to Shannon Illingworth, the founder of a publicly traded company called Automated Vending Technologies, or AVT, and the two quickly cut a deal. O’Connor told me that on March 25, 2008, Illingworth gave Dykstra roughly $250,000 worth of AVT stock in exchange for plugging the company on Cramer’s website, TheStreet.com, and promising to provide a personal introduction to Cramer.

This is a bombshell of utterly minuscule proportions, especially since Dykstra disclosed his long position in his column. And neither Lane nor O’Connor are particularly reliable sources when it comes to these things: Lane happily admits to lots of reasons why he has an animus towards Dykstra, while O’Connor, according to Teri Buhl, owes AVT $37,569.82.

But this non-story is getting a new lease of life — even making the New York Post — thanks to a threat from AVT to sue Lane for defamation. And lo, the lawsuit has now appeared — complete with an utterly stupid claim for $100 million in damages. Here it is, from Illingworth via Buhl:

AVT vs. Lane

This is basically all bluster and bullshit, written in particularly bad legalese which doesn’t even seem to have been proofread. There’s lots of talk of “untrue and false statements” but at no point does the plaintiff, AVT, bother to actually say what those libelous statements might be, nor how they might have caused anything like $100 million in damages. (The market cap of AVT is just over $30 million, and it hasn’t moved significantly in months.)

Whenever anybody launches a substance-free lawsuit with a stupidly huge number like $100 million attached, you know that they’re mainly interested in publicity. But this is where things get weird: why would Illingworth and AVT want to give free publicity to the book they claim is libeling them? And why would they carefully time the lawsuit so that it coincides exactly with the publication of the book?

I’m sure that both sides are loving whatever extra publicity they can extract from this lawsuit and I feel a little bit sleazy adding to that publicity myself. This is one of those spats you don’t particularly want either side to win. But I guess the good news is that we’ve come through the first tranche of serious and important crisis books and now we’re seeing the second tranche, where the crisis is used as an excuse for failed hype merchants to try yet another desperate attempt at self-promotion. The sleazy and litigious side of the American Dream, it seems, is impervious to crisis. Maybe in fact it thrives on it.

Is this new? Following a link from AR today, I ran straight into a Time Magazine paywall:

That’s it: lots of sharing tools, but just one paragraph of the article, and then an invitation to subscribe to the magazine ($40 per year) or download the Time iPad app ($5 per issue, which works out at $260 per year, or thereabouts). Either way, even after you’ve shelled out your cash, you still can’t read the story on Time.com, as far as I can tell.

I don’t get it: I thought that Time.com was all about maximizing pageviews, and was also a website happy to run stories talking about how “almost everybody who has ever tried charging for content has failed”.

It seems that Time has come to the conclusion that if it can’t make money charging for content on the web, it simply won’t publish that content on the web: it’ll just run a one-paragraph snippet, and force you to read the article elsewhere, if you’re so inclined. It’s an odd choice to make; I wonder how long it’ll last. And, can somebody tell me how long this has been going on? It’s certainly the first I’ve heard of it.

Update: AR says that the paywall wasn’t there this morning. Curiouser and curiouser.

John Carney notes that Goldman Sachs is being much quieter in response to the FCIC’s subpoena than it was in April:

The same afternoon that the SEC lawsuit became public, Goldman vowed to “vigorously” contest the SEC’s claims and described the lawsuit as “completely unfounded in law and fact.”

Back in April, this kind of combativeness was new for Goldman. It was followed shortly by chief executive Lloyd Blankfein saying that the firm’s longstanding strategy of not engaging with the public or responding to criticism was “probably a mistake.”

Has Goldman had second—or third—thoughts about its PR strategy?

Goldman’s response to the SEC’s suit was so blunt that it is believed to have angered regulators, pushing the two sides further apart and perhaps delaying a settlement. It was a gamble for Goldman and one that may have backfired.

The main difference between now and April, from a PR perspective, is that Goldman Sachs is now being advised by the so-called “master of disaster”, Mark Fabiani. And the fact is that if Goldman does nothing to extend the FCIC-subpoena into a second news cycle, this brief burst of bad publicity is likely to go away.

Still, as I said after the Fabiani news came out, the problem here is much deeper than public relations: it’s that arrogance and secrecy are in Goldman’s institutional bloodstream. Fabiani can’t control Goldman’s relations with the FCIC, any more than Brad Stone can control silly nastygrams from the NYT’s lawyers. But here’s some $3.99 reporting for you: Pulse is back on the iPad app store, and it still features the NYT news feed, and it still frames NYT web pages. Score this Apple 1-0 NYT. As Jonah Bloom has it:

The whole idea of trying to force people into certain media consumption habits seems futile in an era when technology has enabled people to consume whatever they want, however they want it.

Most of the strategy people at the NYT appreciate this. But lawyers are always a bit slow on the uptake.

Andrew Vanacore spins a whole story out of one curious datapoint today: he says that on USA Today’s iPad app, advertisers such as Marriott are paying “about $50 for every thousand times, or impressions, the ad appears”, compared to less than $10 on the website.

I just downloaded the app to see for myself, and indeed the ad doesn’t work unless and until the iPad has an internet connection. Unlike say the Wired app, where the ads are downloaded with the app itself, the USA Today app can download the ad from an ad server which counts impressions.

Maybe that makes some sense, for advertisers which are used to running ads on a CPM basis. But it seems to me that one of the great things about the iPad is that it can be read in a leisurely fashion in places where there isn’t an internet connection — by the pool, or on the subway, or in an airplane. The problem is that Apple, if I have my facts right on this one, either can’t or won’t tell publishers how many times a particular ad has been viewed, if the ad is downloaded as part of an app.

In reality, this isn’t much of a problem at all: it’s long past time that we got over the tyranny of the CPM, especially when it comes to glossy, high-production-value ads on the iPad; the bigger problem is that Apple is far from forthcoming with the kind of demographic data that advertisers crave.

In any event, I look forward to a time when iPad ads — at least the ones within apps — are not sold or counted on a CPM basis. And I suspect that so long as they are, revenues will be significantly lower than they could be — not least because those ads simply won’t appear for many people trying to use the app.

Remember the war over whether or not Rupert Murdoch would be able to buy the WSJ from the Bancroft family? Sarah Ellison has written the definitive account of the whole story, and now follows up with a couple of startling quotes from the Bancrofts who opposed the sale:

“I feel blessed it happened when it did,” Christopher Bancroft, a Bancroft heir and former Dow Jones director who campaigned against the deal with Murdoch, told me recently. “I’m glad I didn’t get my way.”…

Even Leslie Hill, a Dow Jones director who opposed the deal so passionately that she resigned her Dow Jones board seat in protest, says she doesn’t regret handing the company over to Murdoch. “Just look at how our family would have fared during the recession,” she told me recently.

It was always clear, of course, that Murdoch was offering the Bancrofts far more than their company was worth. But the family had long said that Dow Jones was not for sale, and before selling out they insisted on putting together safeguards to preserve the WSJ’s independence. Inevitably, those safeguards were ignored by Murdoch, and the paper has swung to the sensationalist right.

But rather than regret the sale to Murdoch, the Bancrofts who opposed the sale now are relieved that they lost. They thought that they were standing up for something more important than money — but now it turns out that money would have turned out to be more important after all. Glad that’s cleared up.

John Gapper returns to the subject of newspaper paywalls today, saying that in the UK, Rupert Murdoch’s Times will have to appeal to a narrow elite if it is to succeed online — something Murdoch has never been comfortable doing. Going after a mass audience online is hopeless, he says, in the face of much lower-cost competitors like the Huffington Post:

Mr Murdoch’s News Corp estimates that the marginal revenue from an occasional browser is less than one tenth of a penny a year. Even Group M, the media buying agency of WPP, the advertising group, argues in a research note that the bulk of news surfers are “useless tourists” who not only pay nothing but have little advertising potential.

What Gapper is recommending to Murdoch is the have-your-cake-and-eat-it holy grail of publishing online: set up a paywall, get subscription revenue, and then see your advertising revenue rise at the same time, when media buyers start being able to target your specific subscriber base rather than just chasing “useless tourists”.

The logic here has existed in print publications for years: newspapers with a cover price tend to have higher ad rates than free sheets, because their readership is more affluent and is also more likely to actually read the paper (and see its ads).

But essentially what’s happening here is that advertisers are using willingness to pay for a newspaper as a proxy for all manner of other desirable traits in newspaper readers, just because there’s no other way of really knowing who’s reading what.

Online, however, is different. Newsletters still exist — where one or two people put out a specialist product, charge a lot of money for it, and manage to make a living on subscription revenue alone. But when it comes to bigger news organizations, no one has even come close to covering their editorial costs with online subscription revenues. So while paywalls can turn out to be an important part of a publisher’s online strategy, a lot of their value comes not from direct subscription revenues but rather from the fact that they allow advertisers to target a specific group of people.

So far, so print-like. But the fact is that online there are much more useful and granular ways for an advertiser to work out who they’re targeting, beyond just saying “we want people who are willing to pay to read this publication”. Media buyers evolve slowly, and they’re used to that model, so they’ll stick with it to a certain extent as they migrate their budgets online. But eventually they’re going to realize that if they stick with that outlook, they’re going to lose access to a huge number of high-value consumers. Millions of people are willing to pay for a physical object — a newspaper — but are not willing to pay to read that same newspaper online. It doesn’t make sense that those millions of people are hugely desirable readers when they’re reading a physical newspaper, and hugely desirable readers if they pay to read content online, but are just “useless tourists” if they don’t pay to read content online.

So advertisers, looking to reach a large audience online, are going to have to look past the simple question of whether or not people are paying for content. And they’re going to end up with a much more granular and useful way of working out who’s seeing their ads: social media.

The fact is that if I sign in to a free site using my Twitter login, I’m actually more valuable to advertisers than if I paid to enter that site. That’s because the list of people I follow on Twitter says a huge amount about me, and a smart media-buying organization can target ads at me which are much more narrowly focused than if all they knew about me was that I was paying to read the Times.

We’re not quite there yet. But it seems to me that online publications are making a big mistake if they make subscribers go through a dedicated registration and login process, because the demographic information they can get from that will be less useful and less accurate than if they outsource the reader-identification procedure to Twitter or LinkedIn or Facebook. And people will definitely enjoy an automatically personalized reading experience, where they can see what their Facebook friends are reading and what the people they follow on Twitter are reading.

At that point, they’re not “useless tourists” any more: they’re highly valuable and targetable news consumers. And the question of whether or not they’re paying for their news becomes much less important to advertisers. And, therefore, to publishers as well.

Peter Kafka actually bothered to ask the NYT about how traffic from side doors (as opposed to the “front door”, which is the home page) would be treated once the paywall goes up. And he got a pretty unambiguous answer:

Readers that are referred from third party sites such as blogs will be able to access that content without hitting their limit, enabling NYTimes.com to continue being a part of the open web.*

That’s great news, and it confirms that the paywall is more of a navigation fee than an FT-style meter. All paywalls have workarounds, and it’s silly to spend a lot of effort trying to stop the determined from reading your content for free. The NYT paywall instead targets the loyal readers who go straight to the site.

Of course, there are consequences to that decision. For one thing, it shrinks the universe of potential subscribers, and therefore the amount of revenue the paywall scheme might realistically make. And more invidiously, it places the NYT’s own blogs at a huge disadvantage compared to everybody else’s. I can link to an NYT article knowing that my readers will always be able to follow the link, but Paul Krugman can’t. Which isn’t going to make him very happy.

And then there are all those devilish details as regards what counts as a story for the purposes of the meter. If a David Leonhardt column links to his rent-vs-buy meter, does following that link tick the meter up a notch? If I go to a blog home page and then click to read an individual post in full, is that an extra story-view? If I quickly click through half a dozen David Pogue blog entries, is that six? And what about search? Is the NYT essentially telling its non-subscribers that they should only use Google to find NYT stories, rather than its own search product? Does a page of search results even count towards the meter, or just when you click on one of those results to read a story?

Many of these details will surely emerge in coming months. But it does now seem as though one of the biggest questions seems to be settled. If you come to the NYT from Twitter or Facebook or Google or blogs, your pageview will not count towards your quota. That’s good news.

Update: The NYT has now sent me their own version of this statement, which explains that the side door works a bit like foul balls in baseball: they count when you’re not about to strike out, but they don’t count when it really matters.

Once the pay model is implemented next year, the majority of our readers will be unaffected when using the site and will continue to have the same experience they have always had. Readers will only be prompted to pay after reaching a certain reading limit. The pay model will be designed so readers that are referred from third party sites such as blogs will be able to access that content. Links from referrals will count toward reading limits but never trigger the gate, enabling NYTimes.com to continue being a part of the open web. Additional details we be unveiled later in the year including the reading limit and pricing.